US dollar poised to strengthen significantly against euro: bank

17 October 2013 19:32  [Source: ICIS news]

HOUSTON (ICIS)--The US dollar will soon enter “a multi-year uptrend” thanks to economic growth and higher real yields that ultimately will improve its value against the euro, a global investment bank said on Thursday in a research note.

Deutsche Bank forecasts the dollar exchange rate with the euro to improve to €0.80 by year’s end and €0.85 within 12 months.

The current exchange rate is $1 equals to €0.74.

The median US chemicals producer sells 26% of its products to Europe, Deutsche Bank pointed out, so changes in the exchange rate can have a significant effect on earnings.

The investment bank forecasts continued demand weakness from Europe amid a greater upside risk to growth to the continent’s economies.

Meanwhile, the US Federal Reserve will likely begin tapering its quantitative easing policy of purchasing $85bn/month in asset purchases before the end of 2013, Deutsche Bank said, and then end the programme in 2014 as monetary policy becomes more hawkish as the US economy accelerates.

By: Jeremy Pafford
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